ThaiBev's purchase of Sabeco sends Vietnam's foreign debt soaring

Updated at Thursday, 07 Jun 2018, 10:47

The Hanoitimes - Loans from ThaiBev and its affiliates for financing the purchase of a US$4.8-billion stake in Saigon Beer Alcohol Beverage (Sabeco) have caused Vietnam`s foreign debt to rise significantly, according to a recent Government report.

"The sudden growth in short-term foreign debt from enterprises and credit institutions has negatively impacted Vietnam's safety level of foreign debt and decreases the foreign debt limit in subsequent years," the report noted.

Illustration photo.

By December 31, 2017, the country's outstanding foreign debt reached VND2,451 trillion (US$107.7 billion), which has been on the growing trend since 2016 and reaching the debt threshold approved by the National Assembly.

The reason behind the growing foreign debt is the increasing number of loans from enterprises. Consequently, the growth rate of medium- and long-term loans is 22.56% and short-term loan 73% in 2017 as compared with 2016.

Vietnam's short-term foreign debt stood at US$21.9 billion in 2017, 25% of which came from the short-term loan worth US$5 billion of Vietnam Beverage, ThaiBev's wholly-own Vietnam unit, for the purchase of a 53.6% stake in Sabeco.

Following Decision No.544 of the Prime Minister on approving a medium-term debt management program during the 2016 - 2018 period, short-term foreign debt should be further tightened, with maximum annual growth of 10%, againts an increase of 73% in 2017.

The Government, thus, capped the limit on foreign loans of credit institutions and enterprises in 2018 at the maximum of US$5 billion, with a view to ensuring the safety level of national foreign debt.

However, the report also stated Vietnam's public debts have been kept within the limit set by the National Assembly.

According to the report, Vietnam's public debt-to-GDP ratio in is reported at 61.4%, government debt at 51.8% of GDP, government-guaranteed debt at 9% of GDP, local government debt at 0.6% of GDP and foreign debt at 49% of GDP.

The outstanding government-guaranteed debt for projects by the end of 2017 stood at over VND247 trillion (US$10.85 billion), or 4.9% of GDP, which is lower compared with at the year's beginning. That figure in 2016 was significantly higher at VND255 trillion (US$11.2 billion) or 5.7% of GDP.